Profit Taking Sweeps Markets

U.S. Dollar Trading (USD) a delayed ‘buy the rumor, sell the fact’ hit the
markets Thursday with traders locking profits from the FED QE4 Rally overnight.
We saw large USD buying against Gold and Dollar gains against all the FX
majors. Weekly Jobless Claims were very strong at 343k but the profit taking
had already begun and US Retail Sales missed forecasts. Looking ahead, December PMI Manufacturing forecast at 52 vs. 52.8
previously. November Industrial Output forecast at 0.3% vs. -0.4%.  November CPI
forecast at -0.2% vs. 0.1%.

The Euro (EUR) the EUR/USD failed at 1.3100 and kept to a tight range just underneath
the level. Traders are growing more bullish now that it looks like the ‘irreversibility’
on the Eurozone is in place. The EU Summit saw the leaders sign off on the
recent moves to integrate the EU further. The Sterling (GBP) pulled back with the rest of the market as profit
taking dominated most of Thursday. The outlook is still strong although the BOE
has traditionally jawboned more than most central banks. Looking ahead, Flash December Manufacturing PMI forecast at 46.6
vs. 46.2. December Inflation final -0.1% vs. 0.3% previously.

The Japanese Yen (JPY) Yen selling accelerated overnight with USD/JPY and
EUR/JPY surging higher. USD/JPY is approaching Y84 and EUR/JPY key resistance
at Y110-111. The Japanese elections are held this weekend with a BOJ meeting
next week to be the first time the new leaders can make an impact. 90% of
economists believe new measures will be announced. Australian Dollar (AUD)
hit 1.0510 at the
height of the profit taking but the market has since resumed its uptrend and we
are back at 1.0450 at the end of Asian trade Friday. AUD/JPY is approaching Y88
which has been a major stumbling block in recent years. Looking ahead, Japanese
Elections this weekend.

Oil & Gold (XAU) Gold is range trading under $1700 with sellers still
on control for now. OIL/USD bounced off $86 to rally to $87 before settling at
$86.50.

Pairs to watch

EUR/USD to retest 1.3175
2012 highs?

XAU/USD Fundamentals
fighting Techs?

TECHNICAL
COMMENTARY

By Anthony Darvall (TonyD)